Tuesday, September 16, 2014

Following the announcement of the Apple Watch, I read two
newspaper articles today that said basically the same thing:the device is a sort of blank platform without (as of
now) the “killer app” that will make it an indispensable accessory, like the
smartphones we have all become so attached to.The writers note this is Apple’s genius – create a platform
with an elegant user interface and just enough basic capabilities and leave the
“what do you do with it?” question to be answered by app developers.However, those app developers aren’t
necessarily Apple employees, and that is where the business model differs from
conventional product development.

It is a principle real estate developers need to heed.

Chistopher Mims writes in The Wall Street Journal, “When a
company like Google or Apple deliberately creates a place for other companies
to sell their own, complementary wares, it is called a platform.”That’s what a city is:a platform.It is also, specifically, what a suburb almost never
is. And suburbs are pretty much the only form of new real estate built these days, even when they're designed to look like towns.

A city, with its grid of streets, is a place for private
entities (companies, institutions and homeowners) to create and sell their own
complementary wares, which we call buildings.The structure of a city is expansive and open-ended, both literally
and figuratively.It is the
physical armature into which individual buildings, homes and businesses fit, and it is endlessly adaptable
for different building types, sizes and functions.The city infrastructure provides the basic capabilities to make those
buildings, and the activities they house, function, just like the accelerometers, wifi, gps, buttons and screen
on your smartphone.In cities,
individual business models and financial decisions, whether a neighborhood
market, a tech startup, or an individual home purchase, follow the structure of
the city.

Suburbs, on the other hand, are not structured this
way.Unlike traditional cities,
the design and creation of suburbs is largely done by real estate development
companies, which try (following business logic) to control the largest chunks
of land they can and then build (or control) everything within it on a
more-or-less speculative basis.The result is limited and closed in both physical scale and in its
outcome.Every building is
type-cast, and permanently locked into its role by zoning regulations and deed
restrictions.Infrastructure is
chopped up into discrete chunks (making it very inefficient, by the way).The structure of suburbs follows business models and financial
decisions by a relatively small number of enterprises.It is the inverse of
cities.

And like Ma Bell, that business model is outdated.The product it creates is inferior.Ed Glaeser, Richard Florida, Christopher Leinberger and others
have written much in recent years about how cities embarrassingly outperform
suburbs economically.Cities
thrive, they point out, because they are dense, open-ended, adaptable webs of
human interactions, and this grows directly from their physical character as
expansive “open-platform” places that allow for an endless variety of building
types, sizes, ages and uses all mixed together at a very fine grain.Suburbs, are the polar opposite on all
those counts.Market researchers
are now confirming that “buyers” agree, and preferences are shifting toward
city living.

But, while the formal
advantages of cities over suburbs are well understood, particularly by New
Urbanists, no one seems to have really cracked the code on how new places can
be built that way.It is the
business model of real estate development itself, I believe, that drives the form
of suburbia (and its large-scale tendencies are even an uncomfortable presence
in old cities).Simply telling or
expecting developers to redesign their product to look like urbanism does not work because the nature of a city as an
open platform like an iPhone is not something real estate developers are equipped
to build, even if they want to.And everything about the real estate business model discourages them
from wanting to.

On building platforms, Mims continues, “Apple, more than
Google, has mastered this art, having worked hard to give developers the tools
to make apps for its mobile devices, plus a controlled environment in which to
profit from them.”This is what
real estate developers need to figure out:how to build a platform,
and still make money at it.Continuing
the tech analogy, the real estate development industry is like IBM in the
1980s, which was famously unable to foresee the creative destruction about to
be unleashed by Microsoft and Apple.Today’s real estate development industry is not only unwilling but
utterly incapable of producing true cities.It is not a matter of “retooling” but of rethinking and
reorganizing the industry.

Municipal and County jurisdictions need to change, as well,
and an impressive number of them dove headlong into that difficult work as a response
to the Great Recession.Real
estate developers, on the other hand, emerged from the Recession even more
entrenched in their old ways, more risk-averse than ever.And, like most businesses, they equate
lack of control with risk.The
companies that create tech platforms, though, have figured out both how to
embrace the openness of the platform and how to make money at it.The time is ripe for real estate
developers to figure that out; to give residents and business-owners and
institutions the tools to make useful, adaptable buildings in a dynamic and
economically robust mix.That way
will we begin to get real cities built again.

Wednesday, August 15, 2012

Rob Steuteville, publisher of Better! Cities & Towns, suggested a follow-up post dealing with how one employs the Economy of Means for real estate development. This isn't precisely a response to that, but it explores the EoS/EoM dialogue in light of some recent books I've read. Rob references James H. Kunstler's The Long Emergency.

For a number of years I've been pointing out that among the best lessons
Robert Davis taught us was how to develop in this way. Unfortunately, too
few New Urbanist developers/developments followed his wisdom of starting
small, working in small increments, etc. even though Andres has
included it in his talks/tours of Seaside as long as I've been hearing
them (15 years). The lesson was all but completely lost in the go-go days of the mid-2000's.

One of the things I realized, with regard to the commercial ventures
that Robert and Daryl began, was that they scaled the commercial
ventures to the market they had at the time. For example, at the very beginning of Seaside, they sold seasonally,
under awnings, with literally "low" overhead! Daryl even screen-printed
Seaside T-shirts in their kitchen. EoS would never have recommended
that! As the market grew, the commercial business models grew. Some
grew physically, like Bud and Alley's and Perspicasity. Collectively
the whole commercial realm of Seaside grew along with its market.
Contrast that to the standard model of a chain like Chili's, or Publix.
They have a business model/format (based on EoS) that demands certain
market characteristics (traffic counts, rooftops, aggregate spending
power, etc.), and they then look for the locations that fit those
characteristics. In another way of looking at it, they scale the market to the business.

It's not just chain retailers who operate this way. Homebuilders,
Apartment developers, office parks, industrial developers all approach
the market this way: Here's our peg, where's the right sized and shaped
"hole" in the market? EoM approaches it differently: here's a hole;
what sort of peg can I put in it.

EoS brings with it the generic, reductive, mass-produced, which is
so
anathema to the authentic places people cherish. New Urbanists have
tended to look at this as a design or regulatory problem, but it is
fundamentally an economic issue; specifically, the way "economy" is
defined (means or scale). I haven't read Jane Jacobs' post Death and Life work, but I suspect this may be part of why she expanded her focus to economics...

I believe it's not just The Long Emergency that makes this
discussion relevant. The way that technology is progressing these days
is frequently in the hands of small entrepreneurs and techno-tinkerers.
These folks are developing RepRap machines, drones, robots, software,
iPhone apps, and even manipulating genetic code in an utterly EoM realm
of basements, laptops, bedrooms. And they're frequently doing end-runs
around the corporate behemoths, who rely on EoS to fund enormous labs,
factories, R&D facilities.

Ironically, it seems post-recession capital markets are searching
more voraciously than ever for the mega EoS real estate development
deals. By nature, the larger the deal, the more uniform the
"products." At the same time, market researchers are discovering that consumers are looking for more specific, unique, niche real estate products - with a heavy emphasis on experience
rather than "features." There's a massive de-materialization of
consumption going on, and it is bound to have big impacts on urban form
(in my opinion, favoring traditional urbanism, but probably not in the
ways many would imagine.) It is apparent that the capital is going one
direction, despite the fact that the market is going in the exact
opposite direction. I posed this question to panelists at a recent ULI
conference. The response was dumfoundment: yep, good question, but we
don't know how those two realities will be reconciled.

The book, Abundance, by Peter Diamandis and Steven Kotler, is a
fascinating compendium of the exponential growth technologies that are
advancing at ever-more-rapid paces, with impacts reaching deep into the
developing world. Stewart Brand writes about some of these, as well, in
Whole Earth Discipline. (Both books are a fascinating antidote -
or anti-venom - to Kunstler's writings. I'd love to see all those guys
in a live debate!)

It is my developing belief that the nature of emerging technologies,
the consumer market, and the post-Recession real estate market are all
much more animated by EoM innovation and customization than the EoS,
mass-production, pre-Recession, 20th Century, Modernist paradigms within
each of these sectors. Tactical Urbanism, and the ethos of the CNU
NextGen group are excellent examples of this. The dinosaur developers,
homebuilders, equity funds, etc. will figure this out sooner or later -
probably later. So will automobile companies, media companies, "too big
to fail" banks, and governments. It may be a different response to The
Long Emergency. And it just may mitigate some of the nastier effects
of it.

Thursday, April 12, 2012

There is often a desire to
reintroduce specific traditional business models (like the corner store)
to populate the neighborhood centers we all like to see. However, that
can meet a brutal reality in an economic realm that is occupied by
Walmart and ubiquitous, cheap transportation. Those cynical of urbanism
will hold this up as "proof" that traditional urbanism has gone extinct
for a reason, that it is no longer economically viable.

The counter to that, however, is this: traditional urbanism existed
long before "the corner store" as we conceive of it, and was/is able to
accommodate changes in economic models at all scales, from individual
retail formats (remember where the Department Store was born -
traditional downtowns in the 1800's) to city- and regional scale shifts (New York, for example,
wasn't always a center of fashion, entertainment, high-tech,
international finance, etc.)

Traditional urbanism is an armature that
is able to absorb all sorts of dynamics and change, and it is not dependent on any single business type.
Therefore, I urge neighborhood advocates to not get wrapped around the axle of
debate about a particular (largely by-gone, at least for the time being)
urban component like the corner store, but rather to embrace urbanism as a
system which can accommodate contemporary retail formats, as well as
"nostalgic" ones, and future ones, which haven't been invented yet. One
of the main ways urbanism is so resilient to these sorts of changes is
because urban buildings (and blocks, streets, even neighborhoods and
cities) can change function over time, absorbing the ebb and flow of,
for example, the balance between retail and residential
units ("rooftops"). Modern Planning holds to the pretense that these ratios are
fixed and predictable, but history (even over a few years or a couple
decades!) always shows that the ratios of retail (and office,
etc.) to rooftops is quite dynamic. On the "supply"
side, distribution models change, products fall out of fashion,
mail-order and on-line shopping rises, etc. On the "demand" side,
residential demographics shift, economies and household fortunes change, occupancy
rises and falls. Yesterday's corner store is today's bagel shop, the
next day's Ke-bab Palace, tavern, coffeehouse, social service agency, or
something-not-yet-invented store.

What's important to "future-proof" a neighborhood is to:

get the urbanism right, so that whatever the business, it "works" because of the logic of the place and its surroundings

understand - and prepare for - those places in the urban fabric
that will tend to favor commerce (i.e. busier, well-located
intersections); which places will tend to favor residences (quieter,
non-through streets) and those places in between which may accommodate
both and/or the increase/decrease of one or the other through time.
These "in-between" or "transitional" zones are particularly important,
in my opinion, and an under-explored area in New Urbanism. (This
continuum is the genesis of the urban transect, an idea adapted from environmental studies. As an aside, I learned once that "transitional" plant species - those that grow at the edges of wetlands - not in full wetlands or full uplands -
are more drought-tolerant than either wetland OR upland species. The
reason is they are adapted to dramatic changes in hydration,
whereas upland- and wetland species are not. There is an analog here, to the "transitional" zones in neighborhoods, which may be residential one generation, commerce the next.)

build commercial buildings that are either cheap/light enough to
be disposed of or relocated when their site demands/supports more
intense use; OR robust and generic/flexible enough to accommodate
dramatic changes in use without major renovation. Each approach
is inherently "sustainable" (resource-efficient) but may be called for
in different conditions (some of which may be adjacent.)

finally, employ "zoning" (or get rid of it altogether!) that
permits easy changes in use, and let, instead, the urbanism (per #2
above) guide where/how different activities are decanted throughout the
town. If the urban fabric is "right", the quiet, narrow, indirect
street will never be attractive for the 7-11 (or whatever) and the busy
corner will never make sense for a mansion. Perhaps this is the next
frontier of urban design; "legible" urbanism that directs use through
the inherent logic of its fabric.

Wednesday, November 16, 2011

The first entry in a series comparing economy of scale with economy of means.

Through the process of developing Longleaf we were regularly taken to the financial whipping post when factors beyond our control didn’t go as expected: nearby road and retail projects were years behind schedule; a heavy construction contract went bad. The honest mistakes we made had out-sized negative impacts, and the complexities of building a large, multi-use development seemed to be magnified. I believe the reason the project was so vulnerable lay in an economic principal we pursued, the economy of scale (EoS).

Modern development practice is predicated on mass-production models, which are based largely on EoS. The cost to manufacture a widget goes down when you make a large number of them because your costs are spread out among more “units.” Cheaper by the dozen; cheaper still by the million. And if your costs go down, profits can be assumed to go up, all things being equal. It’s a self-evident and unassailable economic principle, right? But there are limits to its application, particularly in the speculative and complex world of real estate development, where contingencies and exigencies abound.

At Longleaf EoS told us that developing 200 lots at a time would mean lower per-unit costs for building those lots, and that building a 3-story mixed-use building would cost less per square foot than a 2-story one (much less a single-story, which was considered anti-urban in those earlier days of New Urbanism.) However, pursuing these lower per-unit costs we took on much higher total cost, which had to be financed. That meant we had to sell those “units” at a pretty fast clip or the debt service would not only eat up the economies we had eked out, but it could also eat up ALL our profits, and eventually us! Economy of scale led to a deal with the devil known as debt.

Being indentured to so much debt created a cascade of pressures that compromised better place-making: suppressing prices and appreciation, bending on architectural standards, overlooking key details in executing the public realm. It also consumed resources and attention we could have put to better use making a more beautiful and vital place, like fostering the civic realm or building more retail. (This isn’t to suggest Longleaf is a failure: quite the contrary, and its success as a place is a testament to the power of good urban design, in spite of things we could have done differently or better.)

Houses aren’t widgets; development is not manufacturing; a town is not a factory. Human settlements are more like ecosystems, subject to the complexities of human nature at every scale: individuals, families, social groups, economic production and consumption, civic life, fashion, politics and governance – these are all endlessly varied and dynamic. What’s more, the physical context of “real estate” is, by definition, unique to each location. The internal and external forces that shape our built environments are in every way contrary to the purity of the assembly line. Mass-production development would be well suited to creating beehives, perhaps, but it is a poor tool for creating human habitats.

OK, so if scale (and its attendant repetitiveness) is the problem, how does one argue with “economy,” particularly these days? I struggled a long time to figure out how we might build economically, without falling into the trap of the economy of scale. Following clues from how Robert and Daryl Davis developed Seaside, and looking at how traditional towns and cities came to be, I discovered that the underlying economic principle of authentic urbanism is the economy of means (EoM). In the days before massive capitalization and long-term debt, cities were built one building at a time. Likewise, in the days before mass-production, buildings were essentially built by hand. So, at a fundamental level, traditional cities were built by hand, or rather, LOTS of hands. And when you make something by hand, you naturally employ the economy of means.

Everyone who has made something by hand understands and employs EoM intuitively. To the craftsperson it doesn’t make sense to purchase extra material, only to throw it away. It makes sense to build something that uses material and performs its function with the greatest efficiency. It doesn’t make sense to construct something flimsy, only to have it break in short order; you want it to last. And, since it’s going to last and serve as a reflection of its maker, it makes sense to make something beautifully, incorporating timeless principles of proportion, elegance, and appropriate embellishment. Finally, when you work by hand, you want to share knowledge with others doing the same thing, to make it easier on yourself. This is a fundamental characteristic of human community, which is also, alas, something we urbanists are big on!

When many individuals employ EoM, a rich variety of techniques develops. So does a progressive, “living” tradition, as folks share knowledge about what works and what doesn’t. Innovation, Adaptation, Variety, Tradition and Progress grow naturally out of EoM building. EoS manufacturing stifles all of these, as its underlying imperative is reductivism. Cities built on EoM function in richly complex ways and as a result are enormously adaptive and resilient. Those manufactured with EoS are dead on arrival.

EoM is just as valid an economic principle as EoS, and they both have their place. Economy of Scale works wonders in the purity of manufacturing processes, where variables can be controlled, and where repetitive products have an advantage. Real estate economics, on the other hand, are not kind to repetitive, commodity "products." Remember the first three rules are location, location and location - real estate value comes from distinctiveness, not from similarity. I propose that when it comes to building the human habitat, the more appropriate economic principle is the Economy of Means.

The best-loved buildings and places admired by urbanists and the real estate market alike embody EoM, and it’s no accident they have proved to be durable places, both physically, economically, and in people’s affections. This is instructive for those of us involved in the project of buildings and places. A revived understanding of EoM will be especially useful in the new economic realities.

Tuesday, July 12, 2011

This anti-sustainability backlash seems to be responding to a perceived conspiracy with a counter conspiracy. Tea Partiers talk a big game about olden times, Founding principles, traditions, etc., but fail to observe that life during those agrarian times-and the social context in which our great Nation’s founders conceived our Republic – bore a striking resemblance to the sustainability “Agenda.” It takes only a very brief look at rural and urban life, agriculture, energy and what we would call environmental stewardship in the 18th and 19th Centuries to see that our righteous forebears in fact did “live, work, and play” (as well as worship, learn, and even govern!) together in ways We cannot fathom in our McSuburban condition. The Chinese Reds didn’t invent these ideas; they are basic human needs and activities, and they must be done together, and we DO them together, even if it requires an insane amount of energy and vehicle miles to do so.
Ironically, there has never been a settlement pattern more dependent on the State than automobile-oriented Suburbia. It was invented by Modernists, the kissing cousins of Marxists, and fomented only by a Federal project that was shot through with the command-and-control policies that Tea Partiers rightly find so problematic.
As evidence, I offer the fact that such a pattern never existed before 1900, the age of Marx et al, and that the urban/agrarian settlement patterns touted as sustainable today were the worldwide norm until then.

Monday, February 7, 2011

Here is a link to streaming video of the lectures I gave at the University of Miami's Masters of Real Estate Development + Urbanism program this past fall. There were 8 lectures in all, but the first one hasn't been posted yet.

The lectures are organized as 4 pairs of lectures:

Pair 1 looks at the history of New Urbanist development as the "Renaissance" of urbanism. First, the Founders/legacy projects exemplified by Seaside; second, the "follower" projects, exemplified by Celebration, that applied New Urbanist principles to master-planned community development.

Pair 2 examines fundamental disconnects between the realities of development as it has come to be practiced and regulated, and what society expects of it.

Pair 3 grapples with how the present economic cataclysm impacts not only what we develop, but also how we go about doing it.

In the final pair I try to look forward through the economic recovery to the new normal, and suggest some ways to learn the lessons of urbanism and reconcile the fundamental disconnects of development practice in order to find a new paradigm for development.

Sunday, December 26, 2010

Florida’s formative mythology grows out of the imaginations of the millions who have moved or lived here over the centuries.The ideologies that grow out of these diverse imaginings have created an array of artifice as divergent as the dreams of millions.Landscapes born of nostalgia, fantasy, utopia, or futurism abound throughout Florida, not just in the Magic Kingdom.

But as individuals project their dreams onto the shared canvas that is this State, they are confronted by millions of others doing the same thing.Florida is ultimately left with the core challenges of community:getting along with others, preserving one’s own interests, and finding a future that is better for everyone.Unfortunately, when individuals imagine a life for themselves, community is usually left out of the picture.

So, how can Floridians create community while also facilitating their individual desires? Put another way, how does community form while navigating these conflicting ideologies?And how does a built environment embody and foster this community of characters?The problems are practical, and the search for the solution must be pragmatic.

What is a pragmatic approach to community for Florida:

·one that looks both to the lessons of history, and to the hopes of innovation, that other child of imagination;

Unlike the backward gaze of nostalgia, the forward gaze of futurism, the inward gaze of utopianism, or the outward gaze of fantasy, a living tradition finds practical solutions by looking in all these directions simultaneously; history, longevity, self-interest, and innovation.Out of living traditions grow a host of environments and architectures displaying all the rich complexities of the human spirit.Out of these places – and spaces – grows community, that dynamic that delivers our dreams, both individually and collectively.

Florida needs living traditions that shape its built environments in ways that foster community for a better tomorrow.

Friday, June 4, 2010

In his book Rebuilding, Daniel Solomon sketches out the dilemmas of sprawl, which he refers to as the ''second-era town,'' in his essay ''Two Eras.''There are five major ways in which the second era town is different from the first era town – five ways in which the second era town is deficientFIRST The second-era town wrecks the landscape, both natural and man-made. The blurred distinction between countryside and town only demeans both. In many parts of California there is no longer countryside or town.SECOND The second-era town devours resources – gasoline, land, air, infrastructure.THIRD As the second-era town becomes more and more congested and as universal mobility chokes itself, people's time is consumed in terrible ways.FOURTH Because it is built in such large chunks, the second-era town discriminates against everyone who is not in a ''market sector.'' The big world of Planned Unit Developments does not make odd little corners for people who find them congenial. It is by nature homogenizing and intolerant.FIFTH Perhaps worst of all, the sanitized anti-urban world of the second era is a place of diminished experience and diminished insight for its inhabitants. …To experience the immediacy of the particular, one must walk without locks or security guards. The predictable and edited human encounters of the shopping mall, the office park and the condo rec-room are to daily life what Club Med is to travel.Source Rebuilding by Daniel Solomon (1992 Princeton Architectural Press).(Daniel Solomon, FAIA, is an author and architect with WRT|Solomon E.T.C. based in San Francisco. He is a co-founder of the Congress for the New Urbanism)

We believe people connect best in physical places.Virtual places like the internet play an important role, but are no replacement for face-to-face connections.

We believe that people know how to connect and do so naturally when given the opportunity, and the places in which to do it.People do not need to be told how to connect, but they do need places to do it, places that foster connecting in all these different dimensions.

The first in a series comparing economy of scale with economy of means.

Through the process of developing Longleaf we were regularly taken to the financial whipping post when factors beyond our control didn’t go as expected: nearby road and retail projects were years behind schedule; a heavy construction contract went bad. The honest mistakes we made had out-sized negative impacts, and the complexities of building a large, multi-use development seemed to be magnified. I believe the reason the project was so vulnerable lay in an economic principal we pursued, the economy of scale (EoS).